Where's the harm in tax competition?. Lessons from US multinationals in Ireland

The term "harmful tax competition" has become endemic. It is taken as a tautology that competition among nations for the favors of multinational companies, using their tax systems as bait, is harmful. This is a view held even by those who believe competition to be an inherently good thing in most other areas of business. However, the nature of the harm is rarely analyzed, nor are the parties most harmed identified. This paper attempts to redress the balance. Using the case of technology-based US multinationals located in Ireland, it analyses the benefits and hazards to major stakeholders of tax rules that encourage multinationals to locate part of their operation offshore. I argue that tax competition, even that not considered harmful by the OECD, can damage not only the home country of the emigrating multinational, but also the host country gaining the investment, local communities and the environment.